The dollar held on to most of the previous session's gains against the euro and yen on Tuesday as the market awaited a raft of U.S. economic data ahead of Thursday's Thanksgiving holiday.
News that euro zone finance ministers had voted to suspend disciplinary action against Germany and France for breaking EU budget rules had little impact on the market which was already expecting some kind of compromise.
Instead the main focus was on U.S. and euro zone data, including an expected upward revision to third quarter U.S. growth numbers, consumer confidence and a key business survey out of Germany.
"U.S. data releases today are expected to look positive. Over the last couple of weeks the dollar has ignored positive data so if we are seeing a change in sentiment for the dollar today's releases could be a litmus test for that," said Ryan Shea, senior international economist at Bank One.
"German and French politicians are trying to play down the significance of the Stability Pact decision but it signals the death of the pact in its current form and that opens up the question of euro zone institutional framework."
The euro was up a third of a percent in early European trade at $1.1811, having fallen more than one percent on Monday as the dollar rebounded strongly from record lows hit in the previous week. The dollar was little changed at 109.45 yen.
The main piece of data from the euro zone is the Ifo Institute's November index of German business confidence at 4 a.m. EST. Forecasts are for the index to rise to 95.0 from 94.2 in October.
U.S. DATA
The U.S. gross domestic product figures are due at 8:30 a.m. EST. Economists in a Reuters survey forecast a median 7.8 percent in annualized growth, compared with 7.2 percent in the third-quarter advance estimate, although some in the market were going for a stronger 8.0 percent.
Some played down the likely impact that strong growth data could have on the market, as many attributed the dollar's latest gains to short-covering ahead of the U.S. Thanksgiving holiday on Thursday.
"I think it's (the dollar) primarily repositioning, but the timing of the GDP figures is quite auspicious for the dollar right now," said Naomi Fink, senior currency analyst at BNP Paribas in Tokyo.
The Conference Board's monthly gauge of consumer confidence is expected to show its highest surge since September 2002 to 85.0 in November from October's 81.1. The data is due at 10 a.m. EST along with existing home sales.
In Europe the euro zone finance ministers' decision to suspend disciplinary action over German and French budget deficits met with deep disapproval from the EU executive, the Commission. The deal will be put to a formal vote among the full compliment of European Union finance ministers later.
"This is not a ringing endorsement of the way things stand and there will be tension between the Commission and the finance ministers of the larger states. If we're in a more bullish dollar environment this is only going to reinforce sentiment in that direction," Shea said.
News that euro zone finance ministers had voted to suspend disciplinary action against Germany and France for breaking EU budget rules had little impact on the market which was already expecting some kind of compromise.
Instead the main focus was on U.S. and euro zone data, including an expected upward revision to third quarter U.S. growth numbers, consumer confidence and a key business survey out of Germany.
"U.S. data releases today are expected to look positive. Over the last couple of weeks the dollar has ignored positive data so if we are seeing a change in sentiment for the dollar today's releases could be a litmus test for that," said Ryan Shea, senior international economist at Bank One.
"German and French politicians are trying to play down the significance of the Stability Pact decision but it signals the death of the pact in its current form and that opens up the question of euro zone institutional framework."
The euro was up a third of a percent in early European trade at $1.1811, having fallen more than one percent on Monday as the dollar rebounded strongly from record lows hit in the previous week. The dollar was little changed at 109.45 yen.
The main piece of data from the euro zone is the Ifo Institute's November index of German business confidence at 4 a.m. EST. Forecasts are for the index to rise to 95.0 from 94.2 in October.
U.S. DATA
The U.S. gross domestic product figures are due at 8:30 a.m. EST. Economists in a Reuters survey forecast a median 7.8 percent in annualized growth, compared with 7.2 percent in the third-quarter advance estimate, although some in the market were going for a stronger 8.0 percent.
Some played down the likely impact that strong growth data could have on the market, as many attributed the dollar's latest gains to short-covering ahead of the U.S. Thanksgiving holiday on Thursday.
"I think it's (the dollar) primarily repositioning, but the timing of the GDP figures is quite auspicious for the dollar right now," said Naomi Fink, senior currency analyst at BNP Paribas in Tokyo.
The Conference Board's monthly gauge of consumer confidence is expected to show its highest surge since September 2002 to 85.0 in November from October's 81.1. The data is due at 10 a.m. EST along with existing home sales.
In Europe the euro zone finance ministers' decision to suspend disciplinary action over German and French budget deficits met with deep disapproval from the EU executive, the Commission. The deal will be put to a formal vote among the full compliment of European Union finance ministers later.
"This is not a ringing endorsement of the way things stand and there will be tension between the Commission and the finance ministers of the larger states. If we're in a more bullish dollar environment this is only going to reinforce sentiment in that direction," Shea said.
3287.99
1275.09
